posted by dmat22 on ii13 Mar 2019 11:03
Fozzer,
FWIW, I have a couple of theories on why FRR allowed the default, instead of paying Hope in shares, which was absolutely a viable option, as per the mortgage document.
By allowing a default to occur, if there is now a change of ownership / stewardship at MD / CEO level within FRR (which would be the case, due to the undated and signed resignation letters submitted as part of the mortgage document), this would trigger a cross-default clause within the PSA with the Georgian Government. Ultimately, this would mean FRR’s hand is strengthened throughout the court process in removing / restructuring the Notes which are slowly strangling the life out of the company, as it would create the following situations:
A lose-lose situation, where FRR folds, as it’s insolvent, SN and Zaza are removed from the BoD, and the PSA goes back to the GG. Hope wouldn’t get his hands on Block 12, and would never get his money back.
A win-lose (frr-Hope). FRR are able to prove a case of fidicuary failure, remove Hope from the BoD, and sue for damages. Hope also looking at very real threat of prison time, if FRR can prove illegal actions.
A win-begrudging win (FRR - Hope). FRR are able to pay a lump sum of $20m+ to Hope and Outrider, in exchange for the Notes being cancelled and Hope being removed from the BoD.
Hope is obviously aware of the success at Eldari B, and that his Notes, coupled with his Veto are effectively “death by a thousand cuts” to FRR, and likely wants a bigger piece of the pie (maybe equity, maybe outright ownership, maybe selling off Block 12). Had FRR just paid him shares, he would have continued to strangle the company in it’s quest for funding, however by actually defaulting, FRR, in a round about way, may have protected themselves against Hope’s ultimate play of trying to seize the asset in its entirety, and selling it, by way of a cross-default within the PSA, and it liikely reverting back to the GG.
It’s important to remember, the ruling we read yesterday was regarding a “Variation Order” Hope / OMF wanted in relation to FRR seeking funds from elsewhere, and not the fidicuary claim. That being said, the tactics used by Hope / solicitors were incredibly aggressive, and bordering on purposefully misleading the Court.
Up until this point, Hope and his legal team, seemed to have been very cool and calm in their approach, so it appears to be a change in strategy, and dare I say it… slightly desperate. Now, why could that possibly be? When this started in early-mid Dec, the discovery wouldn’t have been a factor, as we received the Judges initial ruling on fidicuary 21st Dec…
The judges comments surrounding FRR’s realistic prospects of success for appeal, does seem a pivotal turning point in this see-saw battle. Something has changed, since his “conclusion at the interlocutory stage”, which has given FRR this realistic prospect of success on appeal. Hope hasn’t argued the Stay given to FRR either. And, they’re talking, without p
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